AN IMPORTANT UPDATE
FOR OUR FELLOW COMMON STOCKHOLDERS OF
TELEPHONE AND DATA SYSTEMS, INC.
We wish to update you with respect to certain
important developments relating to the April 27, 1998
Special Meeting of Telephone and Data Systems, Inc.
("TDS") and again urge you to JUST VOTE AGAINST the
reincorporation proposal.
1. INSTITUTIONAL SHAREHOLDER SERVICES RECOMMENDS THAT
SHAREHOLDERS "VOTE AGAINST" THE REINCORPORATION
PROPOSAL!
On April 14, 1998, Institutional Shareholder Services
("ISS") issued its recommendation that TDS Common
Stockholders vote AGAINST the reincorporation proposal.
ISS is the world's leading provider of proxy voting and
corporate governance services. It serves more than 500
institutional and corporate clients. The recent
commitment by TDS to propose to restore class voting
rights did not alter the recommendation.
2. THE REINCORPORATION PROPOSAL PERPETUATES CONTROL!
The reincorporation proposal is largely about
perpetuation of control. We believe that the only
reason for the proposal to be structured in this way is
due to the fact that the Carlson family and voting
trust are down to about 53% voting control and they
cannot issue much more Common Stock without
jeopardizing such control. As ISS said in its report
recommending voting against the proposal: "...[T]here
is often an element of control involved in their
[tracking stock] use, and this proposal is
unfortunately all about control." We think the
Carlson's are intent on issuing Tracking Stock because
it allows them to grow without risking control.
Stockholders should force them to make that choice,
which may lead them to realize some of the "hidden
value" in TDS. Voting AGAINST this transaction could
help to eliminate the "Carlson discount."
3. AERIAL COMMUNICATIONS SPECIAL COMMITTEE REJECTS
TDS's TRACKING STOCK PROPOSAL; U.S. CELLULAR
SPECIAL COMMITTEE HAS "SIGNIFICANT RESERVATIONS"!
The reincorporation of TDS and issuance of Tracking
Stock is not contingent on the subsidiary roll-up
mergers. Aerial Communications announced on April 15th
that a Special Committee of its board of directors
determined to recommend that its board REJECT the
proposal from TDS to acquire all of the publicly held
Aerial Common Shares in exchange for shares of Tracking
Stock. The Special Committee of U.S. Cellular has also
informed TDS that it has "significant reservations"
about the proposal. TDS management has stated that it
may proceed with the tracking stock distributions if
the roll-up mergers do not occur and distribute shares
of Aerial and U.S. Cellular Tracking Stock to TDS
stockholders. ISS observed in its report that this
scenario "would create a valuation nightmare for both
types of shares, which even TDS's own financial
advisors did not touch." ISS's concerns about the
consequences of such situation have been echoed by
Goldman Sachs, Bear Stearns, and others in public
writings. Further, the opinions of TDS's financial
advisors included in its proxy statement are dependent
on the occurrence of subsidiary roll-up transactions on
the terms set forth in the Proxy Statement. Do such
opinions now have any value?
JUST VOTE AGAINST!
We believe these latest developments further
support our belief that the reincorporation proposal
will hurt the TDS Common Stockholders. JUST VOTE
AGAINST the reincorporation proposal.
